Thursday, 6 October 2022

Ripple's policy paper backs smart regulation of digital assets in Korea

5 min read

Ripple, one of the leading enterprise blockchain and crypto solutions announced the launch of a policy paper, “A policy framework for blockchain and digital assets in Korea”, in partnership with GBC Korea and Oxford Metrica.

The paper provides recommendations for Korea’s policymakers and regulators to further develop the blockchain ecosystem by enacting a smart regulatory framework and encouraging the participation of financial institutions in Korea.

The paper examines a series of digital asset taxonomies across various jurisdictions, and proposes recommendations for developing the digital asset ecosystem in Korea. This includes:

  • Adopting a digital asset taxonomy aligned with global best practices – providing a clear distinction between payment tokens, utility tokens, and security tokens
  • Implementing a risk-sensitive digital asset regulatory framework to provide certainty and encourage innovation in the sector
  • Fostering digital asset innovation sandboxes to allow market participants to test new and innovative products, services and business models with end-users in a controlled environment with regulatory oversight
  • Promoting public-private collaboration through active dialogue between regulators and market participants

Rahul Advani, policy director APAC at Ripple said, “We believe the policy recommendations outlined in this paper strike the right balance between providing regulatory clarity while having a regulatory framework that’s forward-looking and flexible. We are optimistic that Korean policymakers and regulators will implement a smart regulatory framework to foster innovation while ensuring that sufficient safeguards are in place for the blockchain and digital assets ecosystem to flourish in Korea”.

The paper also explores a cross-border payments use case powered by RippleNet, Ripple’s blockchain-based financial technology, and On-Demand Liquidity (ODL), a Ripple service which leverages the digital asset XRP for instant and low-cost cross-border payments, eliminating the need for costly pre-funded accounts. In addition, a mergers and acquisitions use case using GBC Korea’s GMAP platform is illustrated in the paper.

To gauge the appetite for the development of blockchain technology among leading Korean financial institutions, Oxford Metrica conducted a survey of the CEOs or chairmen of the largest financial institutions in Korea. The survey found that there was considerable interest in the development of the blockchain ecosystem.

Key findings include:

  •  A resounding 100% of respondents indicated an interest in and were actively pursuing the idea of adopting blockchain technology as part of their mainstream operations.
  •  In examining respondents' progress towards implementing the technology, 40% had already developed a proof of concept and 60% were in the pilot stage of implementation.
  •  In terms of lines of business being pursued, 80% were focused on payments, while 20% were focused on capital markets.

Rory Knight, chairman of Oxford Metrica said, “We are advocating an informed set of smart policies for the regulation of blockchain and digital assets to allow the orderly democratisation of financial markets.”

Steve (Jong Sung) Lee, chairman and founder of GBC Korea said, “GBC Korea is delighted and honoured to partner with Ripple and Oxford Metrica in the presentation of this whitepaper, which we hope will contribute to the development of an efficient policy framework for regulating blockchain and digital assets in Korea. We believe that Korea is poised to take a leadership role in this new field”.

Read the policy paper “A policy framework for blockchain and digital assets in Korea” here.

Re-disseminated by The Asian Banker

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